China’s finance ministry meets bankers on boosting Hong Kong’s hub role

“The meetings between Hong Kong and the leaders at the Ministry of Finance [on Wednesday] and the meeting with the PBOC governor last month reflect that the central government [in Beijing] is very concerned about the challenges faced by Hong Kong,” said Tom Chan Pak-lam, permanent honourable president of the Institute of Securities Dealers, an industry body of stockbrokers in the city.

“After collecting views from the city’s bankers, it is hopeful that the central government will introduce policies to support Hong Kong markets, such as the expansion of the connect schemes.”

A banker who attended both meetings said the mainland Chinese officials considered the meeting in November to be fruitful, and so the ministry officials arranged the Wednesday meeting to allow further discussions.

The banker said the attending bankers were very positive about the November meeting and the Wednesday one because they found both Pan and the officials from the ministry to be open-minded and encouraging of the bankers expressing their views.

Neither Pan nor the ministry officials gave instructions, the banker said. Rather they asked the bankers to share views about their operations, the challenges they face and how Hong Kong can increase its competitiveness as a financial centre.

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The bankers shared views on the importance of the many connect schemes established since 2014 for cross-border trading of stocks, bonds, swaps and wealth-management products, as well as the internationalisation of the yuan in the city, another source said.

The bankers also reflected the challenges of global macroeconomic uncertainties and high interest rates that have led to a slowdown in listings across the world, he added.

Hong Kong’s stock exchange has hosted a total of 61 new share listings in 2023 as of November 17, raising HK$41.3 billion, according to EY. The number of deals dropped 19 per cent year on year, while proceeds from the offerings fell 59 per cent year on year, dropping to a level last seen 20 years ago.

The main board of the Hong Kong stock exchange was the world’s largest venue for initial public offerings seven times in the past 14 years, but fell to ninth place in the first nine months of this year in terms of new funds raised, according to data from Refinitiv, which tracks 104 markets worldwide.

The Hang Seng Index has lost 5 per cent in December, adding to losses in the four preceding months. Its 18 per cent slide this year is the worst among major global stock indices, according to Bloomberg data. A sub-index tracking mainland developers has plunged 43 per cent this year.

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Proposals include raising the individual quota to 3 million yuan (US$420,369) from 1 million yuan currently, as well as broadening the range of products to be sold under the scheme.